On October 25, 2024, Alibaba Group Holding (9988.HK) announced it would pay $433.5 million to settle a U.S. class-action lawsuit brought by investors who alleged that the Chinese e-commerce giant engaged in monopolistic practices. Although Alibaba denies any wrongdoing, it agreed to the settlement to avoid the expenses and disruptions associated with prolonged litigation. The settlement was submitted for approval in the U.S. District Court in Manhattan, where Judge George Daniels will review the proposed agreement.
Background of the Lawsuit:
The lawsuit, initiated in 2020, claims that Alibaba’s business practices violated anti-monopoly and unfair competition laws by forcing merchants to choose a single distribution platform. According to plaintiffs, Alibaba’s actions restricted competition, ultimately affecting market conditions and shareholder value. The case covers investors in Alibaba’s American depositary shares between November 13, 2019, and December 23, 2020, a period during which plaintiffs argue that misleading statements by Alibaba caused financial losses when the market began recognizing the alleged monopolistic practices.
Plaintiff Attorneys' Perspective:
Attorneys for the plaintiffs described the settlement as “an exceptional result,” noting that it significantly surpasses the median recovery in similar securities class actions. With investor losses claimed to exceed $10 billion, the settlement is viewed as an impactful resolution. Plaintiffs’ attorneys estimated that if the case had proceeded to a full trial, potential damages could have reached $11.63 billion.
Implications for Alibaba:
While Alibaba avoided an admission of guilt, the $433.5 million payout is a substantial amount, underscoring the legal risks global companies may face due to allegations of monopolistic practices, especially in the U.S. market. This settlement resolves years of litigation and allows Alibaba to focus on its business operations without further disruptions from this case.
Case Reference:
The lawsuit is officially titled In re Alibaba Group Holding Ltd Securities Litigation, filed in the U.S. District Court, Southern District of New York, No. 20-09568.
Next Steps:
The settlement awaits approval by Judge Daniels. Once approved, it will resolve claims by shareholders who contend that Alibaba’s monopolistic practices and subsequent market disclosure led to a significant drop in stock value, impacting investor portfolios.
Background of the Lawsuit:
The lawsuit, initiated in 2020, claims that Alibaba’s business practices violated anti-monopoly and unfair competition laws by forcing merchants to choose a single distribution platform. According to plaintiffs, Alibaba’s actions restricted competition, ultimately affecting market conditions and shareholder value. The case covers investors in Alibaba’s American depositary shares between November 13, 2019, and December 23, 2020, a period during which plaintiffs argue that misleading statements by Alibaba caused financial losses when the market began recognizing the alleged monopolistic practices.
Plaintiff Attorneys' Perspective:
Attorneys for the plaintiffs described the settlement as “an exceptional result,” noting that it significantly surpasses the median recovery in similar securities class actions. With investor losses claimed to exceed $10 billion, the settlement is viewed as an impactful resolution. Plaintiffs’ attorneys estimated that if the case had proceeded to a full trial, potential damages could have reached $11.63 billion.
Implications for Alibaba:
While Alibaba avoided an admission of guilt, the $433.5 million payout is a substantial amount, underscoring the legal risks global companies may face due to allegations of monopolistic practices, especially in the U.S. market. This settlement resolves years of litigation and allows Alibaba to focus on its business operations without further disruptions from this case.
Case Reference:
The lawsuit is officially titled In re Alibaba Group Holding Ltd Securities Litigation, filed in the U.S. District Court, Southern District of New York, No. 20-09568.
Next Steps:
The settlement awaits approval by Judge Daniels. Once approved, it will resolve claims by shareholders who contend that Alibaba’s monopolistic practices and subsequent market disclosure led to a significant drop in stock value, impacting investor portfolios.